How effective can direct mail be at finding off market deals and leads?

The first key to success is to mail a letter or postcard to a list of people that fit the category of a potential motivated seller (pre-foreclosure, probate, distressed property, absentee owner, etc). Within your mailing, you need to let your recipients know that you’re an investor who is interested in buying their property. This is a great way to acquire deals off market, since they are not listed for sale through a real estate agent yet. Off market deals that come as a result of direct mailings can be your best ones, since you don’t have to compete for them. This strategy is one I’ve found myself using a lot more in today’s competitive market. There is a much lower inventory of distressed properties on the market nowadays, so by going off market through direct mail, you can reach motivated sellers before they list for sale and go on market.

A lot of investors avoid direct mail because it can be expensive. It is true that there are marketing costs (about a dollar per mail piece), but getting just one deal as a result of a mailing will usually lead to a big ROI. I want to touch on why this strategy is so powerful by giving an example. One of my elite mentoring students in my Fast Track program, Phil, is a really big believer in direct mail. Every week, he consistently mails and over time he has built up the momentum to receive about 20-30 calls a day. He recently shared with me one of the deals he did through a pre-foreclosure direct mail campaign. After sending the mailing, he received a call from a homeowner and set up a meeting. Phil ran his numbers and found that the property was worth around $250,000 as is. Turns out the homeowner owed $175,000 on the existing loan on the property, had lost his job, and was several months behind on his payments… so foreclosure was coming soon. Phil made an offer to take over the existing loan on the property, take over all outstanding mortgage payments (which were at about $5,000), and pay the homeowner $10,000 cash at closing for the keys. This deal was favorable for the homeowner since it would save his credit, keep him out of foreclosure, and allow him a new start at life with $10,000 cash in his pocket.

After paying the homeowner $10,000, taking over the past due mortgage payments, and hiring a lawyer to put legal paperwork together, Phil had spent about $15,000 on the deal. He spent another $300 cleaning the property (nothing else), put a for sale by owner sign in the yard, and was able to get a buyer for $258,000. At closing, after he paid off the $175,000 and accounted for the $15,000, he walked away with $58,000 on what I like to call a wholesale flip. He basically wholesaled the property to a retail buyer, not to an investor which would be more typical. I would consider this a wholesale because Phil didn’t rehab the property, he just cleaned it, put it back up for sale and sold it to a retail buyer, so he really just wholesaled it retail. This deal resulted in a huge ROI for Phil’s direct mail campaign and definitely made him a believer after clearing $58,000.

I also want to share that Phil does something very interesting with his direct mail campaigns. For my campaigns, I usually mail to the same list three times because my prospects may not be ready to sell right off the bat so I stagger my mailings by two weeks each. Phil, on the other hand, mails to each of his lists six times! He really wants to get in front of his prospects, so he won’t consider a list exhausted until he has sent six mailings out to each person on it. The success of a direct mail campaign can be measured by its response rate, or the rate at which the people you mail to contact you. For a direct mail campaign, the goal should be to hit a 1-3% response rate and then turn as many of those leads into deals as possible.

So, how can you make your campaign successful enough to receive a good response rate?

It comes down to two things: your direct mail piece and your list. If you’re interested in direct mail, I actually offer an entire direct mail campaign as a part of my Flipster system. Flipster is my deal management system, and you can try out a free 15 day trial of the entire program at Flipsterfor1dollar.com. Be sure to choose a trial of either Flipster Pro or Prime, as those are the versions which offer direct mail campaigns for you. Flipster shows you how to acquire your list, and then guides you through a direct mail tool where you upload your list, pick out your mail piece from a variety of selections, and then fund your account to send your pieces. Everything is done for you and the software is really easy to use. You can do direct mail through Flipster and find off market deals without licking envelopes, worrying about postage, or printing any of your own pieces. This strategy is a great way to get in front of more leads before they get on the market, which is where everyone is looking for a deal. Remember, there is a 15 day free trial being offered right now, so make more money today with Flipsterfor1dollar.com!

When is the absolute best time to list a rehabbed home for sale?

A lot of real estate investors make the mistake of listing their houses for sale too early. I’ve tried this myself before, and have put houses for sale when I am about three-quarters of the way done with my rehab. The goal was to save time and find a buyer by the time the rehab was finished. The logic behind this strategy makes sense, but I have found that allowing buyers to see your house in the middle of a rehab can actually hurt you.

The reason why is because most buyers can’t seem to shake their initial impression of a house. If they see a gutted property mid-rehab, even if they come back for another viewing when the rehab is done, they will usually have the image of what it looked like before in mind. I am a big believer in putting your best foot forward, so my standard rule is that I do not show a house until it’s 100% done (which means that the house is clean, has a sign to take your shoes off at the door, and a welcome mat is out). I don’t care if the house I’m trying to sell is worth $100,000 or $1 million, I still want the property to pop! The image that you want to portray to a potential buyer is that your property is a nice one that you care about.

One thing you can do is put the house up for sale a little bit early but avoid showing it until it’s ready. Sometimes, I’ll put a “coming soon” sign out in the yard, which starts building calls and anticipation on the property. Your agent will just have to let prospective buyers know that he/she would be happy to schedule a showing once the house is ready. Whenever I have made an exception and shown a buyer the property mid-rehab, I have lost that buyer.

You don’t want anyone to have an incomplete image of your house in their mind, instead, you want prospective buyers to walk in and feel like everything is brand new.

I hope this strategy helps you on your next rehab. By the way, if you’re interested in working with me one on one, and doing more advanced training, I do have an elite mentoring program that you can check that out at FastTrackApplication.com. My program is by application and interview only, as I am very selective about who I let in. It’s really all about how to build a multi-million dollar real estate flipping business. If you are accepted, I work with you personally at my vacation house in Southern Utah. So, check out FastTrackApplication.com and I’ll be back with another article soon!

Can getting a good deal really solve all of your problems?

If you think about everything that it takes to do the real estate business (especially if you’re renovating homes, fixing and flipping, or doing new construction), you’ll realize that there are a lot of steps that go into getting a deal done. In the business of rehabbing or building and selling specs, you have to acquire a deal, manage it, oversee marketing and sales, and get funding. I have found that if you can just get good at finding deals, all of these other things tend to fall into place.

When you get a good deal, 90% of your problems are solved. Let me give you an example: one of my elite mentoring students from my Fast Track program, Nancy, recently found a high end deal. She got the property under contract for $364,000 and needed about $200,000 to cover rehab costs. Her total costs came to about $565,000, but the property would be worth at least $800,000 fixed up, so there was a net profit spread of about $130,000 on this deal. Nancy got a good deal, and since she is a Fast Track student of mine, I helped her find a funding source that would give her all but about $20,000 at a good interest rate of 10%. The hard money lender loved the deal, so she only had to raise a little bit of money on her own. Without any marketing, she was even approached by a buyer that offered to pay her $15,000 for her deal. She could easily wholesale the property and finding funding to complete the rehab was simple. Nancy had found such a good deal that everything else fell into place.

Some of the most common questions I get asked almost daily are: How do I get funding? How do I find a buyer? How do I find a contractor? How do I manage a rehab? The key is to not worry about those things right off the bat. It’s all about finding a good deal, and then figuring the rest out because a lot of things will fall into place when the deal is a favorable one.

When you are able to find a good deal, you can make mistakes and still make money. You can easily find the money, contractors, and cash buyers you need if you get a good deal.

Nancy is super excited about finishing her first deal, and if you want to do business like this then check out my Fast Track program, where I work with you directly, one-on-one. It doesn’t matter if you’re making your first deal or your 100th deal, I want to help you build your business the right way, so check out FastTrackApplication.com now! The process is by application and interview only because I am very selective about who I let into my program. I’m looking for someone that is willing to put in the time, energy, and effort to do business, not chase after a deal. My Fast Track program is designed to help build a business that does deals consistently and repeatedly, month after month. Go to FastTrackApplication.com and start building your future today!

How do you wholesale a bad deal? The reality is that you can’t really wholesale a bad deal, but it is possible to turn a bad deal into a good one.

Let me explain how by using an example that just recently happened to me:

I got a deal under contract in Baltimore for $72,000. I thought that I had gotten the property at a pretty good price, so I shopped it out to the buyers that I have in that market for $80,000 (since $72K was my price and I wanted to make $8K by wholesaling the deal). Turns out, my buyers pointed out some issues with the property, such as the fact that it was located on a busy road, and gave me the feedback that my price was too high.

When I went into contract on this bank owned property, I had a ten-day inspection which allowed me to do what I am going to teach you today. After getting the feedback from my buyers, I went back to my listing agent who I was double-dipping with and let him know that I could no longer do the deal at $72,000 (double-dipping means that I went directly to the listing agent on the property instead of using my own, causing the agent to work harder for me because he is representing both sides for a 6% commission, not just the standard 3%. To learn more about double-dipping on deals click here). I pointed out that during my inspection, I realized that my rehab was going to cost a lot more than initially planned so I would need the property at $55,000. A few days later, the agent came back to me and let me know that he received another offer for around $65K, so mine was probably not going to be accepted. I knew at this moment that my $55,000 offer was a good one because I could easily wholesale the property for upwards of $10,000 in profit at that price.

Ten days later, my agent called me back and let me know that the other offer fell through. I knew at this point that I had some leverage, so I made a new offer of $50,000. My logic behind negotiating was that I knew the property could be mine at $55,000, but why not try to come in a little lower and make more profit? The feedback from my buyers, as well as the previous offer, taught me that I could wholesale this deal for somewhere in the $60K range, so by making a lower offer I increased my profit potential significantly!

I took a bad deal, and was able to reverse it into a good deal. This is something I do often in markets I am unfamiliar with because even though I run my formula and check comps to get the right number, the cash buyers in the market usually give me the most valuable feedback. I get three or four cash buyers to go look at the property and ask them what they need the price to be at in order to buy it. In the instance of the Baltimore deal, I asked my buyers if I could get them the house at $65,000 would they would make the deal. A few said yes, so that meant that if I got the house for $65,000, I would just do the wholesale myself. If I was able to purchase at $55,000, I’d be making a $10K profit by wholesaling, and at $50,000 I could make $15K on the deal.

Does this happen every time? The answer is no, but what would most people do in this situation?

Probably exercise their inspection and back out of the deal. But why do that? Why not try to get the price down lower? I gave my agent legitimate reasons to decrease the price by pointing out issues and letting him know that my rehab was going to be a lot more expensive than I had originally thought. I even offered to put my reasons in writing for my agent to take the bank to show why they needed to lower their price.

You want to avoid making a habit out of this strategy because if you do this repeatedly, you will burn bridges and agents will not want to work with you. However, if you have a logical reason behind what you are doing, you too can turn a bad wholesale deal into a good one.

To help you find your next good deal, and as a thank you for reading this far, I’d like to give you my “Data Cruncher” software for FREE! Just click here, enter in our zip code and check out how many properties are underpriced in the area. If you like what you see, just enter your email on that page and we’ll send you a free login to the software, which will help you get on track to wholesaling all kinds of deals!

After you get the software, I’ll invite you to watch a webinar where you can learn how to get paid a $10,000 finder’s fee for bringing me deals. This goes hand in hand with Data Cruncher because you may want to pass off some of the deals you instantly find, and have me do all of the hard work while you collect your $10,000. If you decide not to, that’s ok, you can still keep my software as long as you like….and yes, for FREE!

Recently, I received a comment here from Greg Neelman in Omaha NE. He said:

“Jerry I love all the tips and strategies you share and especially the cool action hero quotes. I’d love to here how you got started. Thanks, Greg”

Well Greg, despite what some people think, I wasn’t born with a silver spoon in my mouth. I came from humble beginnings. My first real job was doing manual labor for a utility construction company.

It was back-breaking work but I was hungry and willing to pay any price to provide a better life for my family so I learned about wholesaling and started flipping $5,000 junker houses in Detroit.

I would wholesale them to investors and make around $5,000 on average per deal. That was about 12 years ago now and I haven’t looked back. Now I do multi-million dollar luxury home developments.

During all that time I have never defined myself as a wholesaler or a rehabber or a builder. I am an “investor” and that means I analyze the market and I find the best opportunities for making money flipping deals.

When it comes to flipping houses, as I’ve flipped hundreds of deals over the years, I’ve focused on creating a systematic approach that could be repeated again and again. And that is what has allowed me to make more and more money while working less and less.

“If you allow yourself to get caught up, you will find yourself spending a lot of money when you don’t have to with the teachings of Jerry Norton. Coupled with his lifetime examples Jerry takes you on a trip with him as he shows you exactly how he does his deals. Very fascinating read. Jerry is clear and concise and quite honestly, you need not go any further when trying to wholesale deals.”

Another reader said…

“This is the most detailed step-by-step procedure that I have come across that REALLY WORKS! Period!”

Dean Amos said:

“Jerry’s book is very conclusive. You acquire a well-rounded understanding of what is involved in Flipping properties. It is very enlightening in discussing the depth and breadth involved in the Flipping process. This book will be the model of all future publications with similar subjects. Jerry has the experience and expertise to complete this very valuable resource and he has done it in world class authority.”

Now, you can go to Amazon and pay $5.99 or as a valued subscriber and follower, I’ll give it to for FREE!

Watch this video as Jerry goes through another one of his new construction projects. It’s one thing to talk about how to make money flipping new homes but it’s an entirely difference learning experience when you can see it in action.